NewKerala.com

Key Points

The Reserve Bank of India is anticipated to announce a 50 basis point reduction in the repo rate on June 6, driven by forecasts from the State Bank of India. This significant cut aims to support the nation's growth by reviving the credit cycle, aligning with other favorable economic indicators such as a good monsoon forecast and falling crude oil prices. The current surplus in banking liquidity means that rate cuts are likely to translate effectively into reduced consumer deposit rates. SBI emphasizes that maintaining growth momentum without stoking inflation remains a priority for monetary policy adjustments.

Key Points: RBI Eyes 50 bps Repo Rate Cut as SBI Forecasts Growth Boost

  • SBI predicts 50 bps rate cut to invigorate credit cycle
  • Current banking liquidity in surplus mode, enhancing deposit rate cuts
  • India's GDP grew by 7.4% led by capital formation
2 min read

RBI likely to reduce repo rates by 50 bps on June 6 to support growth: SBI

RBI may cut repo rates by 50 bps on June 6, says SBI, aiming to rejuvenate growth.

"We expect a 50-basis point rate cut in June'25 policy. - SBI Report"

New Delhi, June 2

The Reserve Bank of India (RBI) is expected to announce a 50 basis points (bps) cut in the repo rate in its upcoming monetary policy announcement on June 6, according to a report by the State Bank of India (SBI).

The report said a large rate cut could help revive the credit cycle, with the total rate cut over the easing cycle possibly going up to 100 bps.

SBI said, "We expect a 50-basis point rate cut in June'25 policy as a large rate cut could reinvigorate a credit cycle".

The report highlighted that the current liquidity condition in the banking system is in extended surplus mode. Due to this, liabilities are getting repriced faster in the ongoing rate-easing cycle. Banks have already brought down interest rates on savings accounts to a floor rate of 2.70 per cent.

In addition, fixed deposit (FD) rates have been reduced by 30-70 bps since February 2025. The report also noted that the transmission of rate cuts to deposit rates is expected to remain strong in the coming quarters.

According to SBI, domestic liquidity and financial stability concerns have eased. Inflation is expected to remain within the RBI's tolerance band.

Given this, the report says that maintaining the growth momentum should be the main focus of the monetary policy, which supports the case for a "jumbo" rate cut.

On the economic front, India's GDP grew by 7.4 per cent in the fourth quarter of FY25, compared to 8.4 per cent in the same quarter of the previous fiscal year. From the expenditure side, this growth was mainly supported by a strong rise in capital formation, which saw a 9.4 per cent year-on-year increase.

The report also pointed out other positive developments such as the Indian Meteorological Department's (IMD) forecast of an above-normal monsoon, strong arrival of crops, and falling crude oil prices. These factors have led SBI to revise its CPI inflation estimate for FY26 to around 3.5 per cent with a downward bias.

SBI further said that higher expected household savings, as mentioned in the latest RBI Annual Report, would be enough to fund the country's growth without causing demand-driven price pressures in FY26.

- ANI

Share this article:

Reader Comments

R
Rahul K.
Finally some good news for home loan borrowers! A 50 bps cut will make EMI payments much lighter. Hope banks pass on the full benefit to customers this time. Last rate cut cycle, transmission was painfully slow. 🤞
P
Priya M.
While rate cuts are welcome, what about senior citizens depending on FD interest? Rates have already fallen so much. My father's pension supplement from FD interest has reduced by 30% in last 2 years. RBI should balance growth with savers' needs.
A
Arjun S.
Smart move by RBI if they go for 50 bps cut. With good monsoon forecast and controlled inflation, this is perfect time to boost growth. MSME sector will benefit most - they've been struggling with high borrowing costs post-pandemic.
S
Sneha R.
Hope banks don't use this as excuse to further reduce savings account interest. Already getting just 2.7% on my salary account - barely covers inflation! RBI should mandate minimum savings rate to protect common people's money.
V
Vikram J.
Good decision if implemented. Our GDP growth has slowed from 8.4% to 7.4% - need strong measures to maintain momentum. With global headwinds, domestic consumption must drive economy. Lower rates = more spending = more jobs. Win-win!
N
Neeta P.
As a small business owner, this could be game-changing! Even 1% lower interest means ₹50,000 annual saving on my working capital loan. Request RBI to ensure banks actually lend to small businesses instead of just corporate houses.
K
Karan D.
<

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50